Fashion is a $2.5 trillion industry that is facing uncertainty in 2020. With the global pandemic casting even more doubt on the future of the industry, it might be the time for a paradigm shift. There is a growing number of high-profile designers joining the ranks of the rebellion against fashion’s sacred traditions. Many believe we are approaching the end days of fashion seasons and runway shows. Will there be an evolution or revolution?
In an interview in 1965, the iconic French designer, Coco Chanel famously said, “Fashion passes, style remains.” The meaning is slightly lost in the English translation of fashion. In French, la mode encompasses more than fashion and its trends; it is custom, practice, or way of life. Much like the English use of the word mode. Fifty-five years later, the fashion industry’s way of life is at risk of fading.
According to a McKinsey report, the main culprit for an uncertain and gloomy forecast is the weak global economy. At the end of 2019, markets forecast troubling times for 2020 and beyond. In a survey of 300 fashion experts, over 57 per cent expect worse performance across value, midmarket, and luxury segments compared to 2019. While North American and European markets were expected to perform poorly in sales, executives are slightly more optimistic in Asian markets. Fashion houses are uncertain about consumer behaviour and consumers are reluctant to spend.
This is a stark contrast to the 2019 forecast, where there was widespread optimism in the fashion industry. In fact, economic profit in the fashion industry has risen year-over-year, from 10.4 per cent in 2016 to 10.8 per cent in 2018. The luxury and affordable luxury segment experienced healthy growth and performance.
So why the shift in outlook? On top of uncertain economic times, fashion executives are weary of emerging powerhouses and consumer shifts. According to the McKinsey Global Fashion Index, three brands rose to the top 20 list of highest earners in 2019: Anta Sports, HLA, and Lululemon. Anta Sports is a Chinese brand that specializes in activewear. HLA is a fast fashion Chinese brand. Lululemon is an athleisure brand from Canada. While the big names such as Nike, Louis Vuitton, and Chanel remain on top, they are keeping an eye out for these new players.
What do Anta Sports, HLA, and Lululemon have in common? They are winners of two consumer trends. Firstly, the rise in Chinese fashion companies reflect the Chinese consumer’s inland shift. While luxury brands continue to see unprecedented sales in China, the Chinese market is beginning to favour local brands for the value and midmarket segments. The rise of ecommerce and increasing foreign tax has Chinese buyers shopping within its borders. Secondly, the market for activewear and athleisure is on the rise. This has favoured Lululemon’s niche product line; not to mention Nike, who sits at number one.
Brands need to focus on three keys to remain in style: be sustainable, go digital, and target emerging markets.
Fashion is responsible for one-fifth of pesticide use, industrial water pollution, and microplastics flow. These harrowing statistics do not go unnoticed by the eco-conscious individual. Companies need to start changing their approach to meet the expectations of customers today.
Stella McCartney, a long-time proponent of sustainable clothing is leading the way. “You know what? We can do so much better. We can do so much more with all this waste; we can consume completely differently.”
Brands that lag digitally will lose out. In a survey, 60 per cent of buying decisions were made based on online research. It is now easy and cheap to shop online. Brick and mortar stores are expensive to upkeep. Social media and ecommerce are the new shopping channels.
Target emerging markets
As China remains a stronghold for many foreign brands to break into, it is time to focus on other growing markets. India and Southeast Asia have untapped markets for Western fashion. Some brands have failed in China due to insensitive advertising. Brands need to know their audience and create experiences that resonate with them.
If there was uncertainty going into 2020, it is a blur now. The fashion industry was hit hard by the pandemic. Cruise and resort shows scheduled for the summer were canceled. Brands pivoted to manufacturing masks and personal protective equipment in support of the fight against coronavirus. However, with brick-and-mortar stores closed and consumers facing financial distress, sales have plummeted.
Fashion houses have been built on the shoulders of creative minds. Incredible visionaries and astute businesspeople have led the largest brands yesterday and today. Brands need to throw out old manufacturing practices for sustainable ones. Brands need to occupy the digital space. Have virtual fashion shows instead. Brands need to look outside of China to growing markets with money to spend.
Industry practices have to give way to these new modes of thinking. Young designers like Olivier Rousteing of Balmain are challenging the status quo. He says, “There’s no couture show? We can present couture in a different way. We are simply going to have to be more creative. Yesterday we had rules we had to follow. But now…”
Do not be surprised if the fashion world emerges and charters a new way of life for itself.